Bitcoin (BTC) fell below $35,000 after Wall Street trading on Nov. 2 as an analysis warned of “overheating” in derivatives.
Bitcoin Reverses Gains Post-Fed
Cointelegraph Markets Pro and TradingView We tracked a pullback in BTC price that erased the reclaimed ground overnight.
The largest cryptocurrency hit an 18-month high of $35,968 on Bitstamp before the merger. This process was gaining momentum at the time of writing.
Stocks soared after Federal Reserve Chairman Jerome Powell gave encouraging words in a speech that suggested interest rate hikes could end soon.
The Fed chose to keep interest rates unchanged at the most recent meeting of the Federal Open Market Committee (FOMC) on Nov. 1.
“Recent indicators suggest that economic activity expanded at a strong pace in the third quarter. Employment growth has slowed since the start of the year but remains strong, and unemployment remains low. Inflation remains low. “It remains at a high level,” the accompanying document states. press release said.
“The U.S. banking system is healthy and resilient. Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, employment, and inflation. The extent of these impacts remains uncertain. “The Committee continues to pay close attention to inflation risks.”
As reported by Cointelegraph, $35,000 has become a key BTC price support level for market participants to hold once reached. Meanwhile, the area above $34,500 is said to be an “ideal” target for regional lows.
#bitcoin has broken out and reached a new high since the beginning of the year.
— Michael van de Poppe (@CryptoMichNL) November 1, 2023
However, Bitcoin has now fallen more than $1,000 from its high, with the derivatives market in particular attracting attention and causing some concern.
“All Bitcoin derivatives markets are overheated right now,” said Charles Edwards, founder of quantitative Bitcoin and digital asset fund Capriol Investments. I have written In X, it is saved along with Capriole’s own data.
“This captures PERP, futures and options. Stay safe outside…”
Reacting to this, popular trader Skew agreed, arguing that it is now the responsibility of the spot market to limit Bitcoin price increases.
“There are things to keep in mind when deciding on a position right now,” he says. Said X subscribers.
“As derivatives become more active, there will be an increased focus on spot markets to support current prices and trends.”
Analysis warns of liquidity ‘lag pull’
The monitoring resource Material Indicators also concluded in its own analysis that the current Bitcoin trading environment requires “caution.”
Related: 4 signs Bitcoin is starting the next bull market
The firm uploaded a snapshot of the liquidity of the BTC/USDT order book on the world’s largest exchange Binance, warning that support levels tend to disappear quickly, or a type of “lag pull.”
New entrant support gaining liquidity at the time of writing was both $34,000 and $33,500.
Such caution is necessary when a block of liquidity is moving like this, as this type of movement often leads to a lag pull.
By waiting until purchases resume, you reduce the risk of getting rough… pic.twitter.com/UCFNpiIoUe
— Material Indicator (@MI_Algos) November 2, 2023
This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making decisions.